''In re Wragg Ltd''

897 __NOTOC__ Year 897 ( DCCCXCVII) was a common year starting on Saturday (link will display the full calendar) of the Julian calendar. Events By place Europe * Spring – King Lambert II travels to Rome with his mother, Queen Ageltr ...

1 Ch 796 is a

UK company law The United Kingdom company law regulates corporations formed under the Companies Act 2006. Also governed by the Insolvency Act 1986, the UK Corporate Governance Code, European Union Directives and court cases, the company is the primary legal ...

case, also relevant for

English contract law English contract law is the body of law that regulates legally binding agreements in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries ...

, concerning

shares In financial markets, a share is a unit of equity ownership in the capital stock of a corporation, and can refer to units of mutual funds, limited partnerships, and real estate investment trusts. Share capital refers to all of the shares of an ...

, and the rule that shares should be exchanged for consideration that is in some sense at least sufficient, not necessarily adequate.

Facts

Mr Wragg and Mr Martin sold their omnibus and livery stable business to a newly incorporated company for £46,300. The company paid by issuing debentures and fully paid shares to Mr Wragg and Mr Martin. The liquidator of Wragg Ltd claimed that the company was (in return for the share issue) worth £18,000 less than the board had decided to pay.

Judgment

Lindley LJ held that the transaction was wholly legitimate. He noted that '' Ooregum Gold Mining Co of India v Roper''

892 Year 892 ( DCCCXCII) was a leap year starting on Saturday (link will display the full calendar) of the Julian calendar. Events By place Europe * Summer – Poppo II, duke of Thuringia (Central Germany), is deposed by King Arnul ...

AC 125 decided shares cannot be issued at a discount, or below their nominal value, and continued. Smith LJ concurred, saying if the consideration is ‘not clearly colourable nor illusory, then, in my judgment, the adequacy of the

consideration Consideration is a concept of English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. The court in ''Currie v Misa'' declared ...

cannot be impeached by a liquidator unless the contract can also be impeached’.

Notes

{{Reflist, 2

References

* United Kingdom company case law Court of Appeal (England and Wales) cases 1897 in case law 1897 in British law

Facts

Judgment

See also

Notes

References